Shipping costs set to increase as a result of the IMO 2020 Sulphur Cap.

 

Is bunker fuel the most un-environmentally friendly fuel in the world'

As the world’s population slowly awakes to the environmental impact our global economy is having, the International Maritime Organisation (IMO) has placed a cap on sulphur content in marine fuel oil from 2020. The emissions regulations take effect in 2020, but what does this mean and what impact will it really have' First, we need to understand why this is significant and what ‘bunker fuel’ is. Bunker fuel is a name given to a type of heavy fuel oil, described by environmentalists as the dregs left over at the end of the refinery process. It’s recognised as the world’s dirtiest diesel fuel – a toxic, tar-like sludge that usually contains 3,500 times more sulphur than the diesel used for cars.

The reduction in the limit for sulphur in fuel oil used on board ships will have tangible health benefits, particularly for populations living close to ports and major shipping routes.

Natasha Brown, IMO Media and Communications Officer

 

Shipping accounts for 13% of annual sulphur oxide emissions worldwide

While shipping is a carbon efficient transport mode, given that roughly 90% of the world trade is carried by ships, the negative impact of shipping on human health and the natural environment is significant.

Easily the most dramatic change in fuel specifications in any oil product market on such a large scale.

The International Energy Agency (IEA)

While the IMO 2020 sulphur cap is good news for the environment, the pending change in bunker fuel standards threatens increased fuel prices, hitting cargo rates. The IMO 2020 sulphur cap looks set to cause huge disruption, and the continued implementation of worldwide Emission Control Areas (ECA) present fuel buyers and suppliers with new fuel choices, prices, equipment, logistical issues and quality challenges.

 

The shipping industry is critical for global trade

Laptops to clothes and almost everything in-between, 90% of the goods needed to power the world get from one place to another as it did almost 500 years ago - by ship. The shipping industry carries necessities like food and clothing all over the world, and yet it’s an industry that goes largely ignored by people outside of it.

People rely on shipping every single day, as the most cost-effective and fuel-efficient way to transport essential raw materials, commodities and consumer goods.

Natasha Brown, IMO Media and Communications Officer

The shipping industry makes the world a smaller place. It is because of the efficient transportation using different types of ships, goods of one country are used by people of the whole world. The shipping industry is the reason that Chinese electronic goods are used around the world or oil from the Gulf Countries can be made available in the farthest corners of the earth.

 

The IMO is a treaty organisation and has no legal powers of its own

It’s the IMO member countries who implement any new legislation individually, and several countries with a coastline are not signatories. Frequency of inspections, global consistency, actual sanctioning of violations, and level of fines compared with the economic gain are key factors to achieving strong compliance. So it remains to be seen how this new legislation will impact the shipping industry.  However, The Trident Alliance is a group committed to “supporting robust and transparent enforcement of sulfur regulations, as well as to comply with said regulations.” Its members include some of the world’s largest container shipping companies including Maersk Line and Hapag-Lloyd, as well as bulk carriers including J. Lauritzen, reefer operators like Seatrade and ferry companies such as Stena Line. For companies such as these that are committed to complying, effective enforcement of the sulfur cap is the only way to ensure a level playing field with other companies that may not be as keen to comply, and through using cheaper, non-compliant fuel, undercut them on rates.

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